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Wednesday, 3 October 2012

Turkey’s Undersecretariat of the Treasury raised 1.6 billion Turkish Liras in a lira-denominated sovereign sukuk (rent certificate) issuance late Oct. 2 and total demand was nearly 3.28 billion liras, the Treasury said in a written statement.

Turkey raised $1.5 billion through a dollar-denominated sukuk last month. The second issuance came as a success as the government diversifies its sources of financing by tapping into the global Islamic bond market.

The two-year lease sukuk will pay a lease return of 3.7 percent every six months.

A prime example of the difficult financial and economic circumstances that the new Egyptian government faces is the billions of dollars it owes foreign oil companies.

The Oil Ministry is in the midst of negotiating new payment deals with the companies, which are among the leading investors in the country, oil executives say. Industry executives estimate that the government is $6 billion to $7 billion behind in payments to the companies for oil and natural gas they have produced and delivered to the state-owned Egypt General Petroleum Corp.

The companies are supposed to be paid within two months, but the government has been delaying payments to conserve cash.

Kuwait's central bank is cutting its discount rate by 50 basis points to 2 percent, state news agency KUNA said late on Wednesday.
The cut will take effect from Oct. 4, KUNA said in an SMS alert. It gave no further details.End

Abu Dhabi based airline Etihad Airways is urging German peer Air Berlin, in which it holds some 30 percent, to offer joint flights with Air France, German paper Sueddeutsche Zeitung reported, citing Etihad's chief executive.
Air Berlin should offer joint flights with Air France, Etihad Chief Executive Officer James Hogan told Sueddeutsche Zeitung in an interview to be published in tomorrow's edition.
Etihad itself is already discussing a so-called codeshare agreement with Air France.
Hogan said Air Berlin would not need another loan from Etihad and would return to profit in the next 12 to 18 months.
Air Berlin Chief Executive Hartmut Mehdorn predicts Air Berlin to at least post an operating profit in 2013, he said in August.End

Abu Dhabi is exiting its investment in German carmaker Daimler, a German magazine reported, citing unidentified people within Daimler.
Abu Dhabi's sovereign wealth fund Aabar is transferring the rights to the last 3 percent of the shares it holds in Daimler to Deutsche Bank, manager magazin said.
Aabar is a unit of International Petroleum Investment Co. (IPIC).
Deutsche Bank declined to comment. Aabar was not available to comment.

Saudi Arabia’s HSBC Purchasing Managers Index climbed to the highest level in four months in September as economic growth gathered momentum in the world’s largest oil exporter.
The index added two points to 60, its biggest monthly increase since January, HSBC Holdings Plc said in a report on Wednesday, led by a jump in output and new orders. HSBC PMI for the UAE, the second-biggest Arab economy after Saudi Arabia, rose about 0.5 point to 53.8.
The gain in Saudi Arabia “is particularly striking given weak September PMI scores for many other major emerging and developed markets,” Simon Williams and Liz Martins, Dubai-based HSBC economists, wrote in the report. “We expect this outperformance to persist.”

Many Iraqis have lost faith in their dinar currency but to some foreign speculators, it promises big profits.
The contrast underlines the uncertainties of investing in Iraq as the country recovers from years of war and economic sanctions.
The logic of the dinar bulls is simple. Iraq's oil exports rose to 2.6 million barrels per day in September, their highest level in three decades; the country aims to hit 6 million bpd by 2017, which would put it close to Saudi Arabia's current level. Even if unstable politics, militant violence and bureaucratic inefficiency prevent that target from being hit, Iraq still seems to be on the threshold of an oil boom that will transform its finances.

Riot police clashed with demonstrators and foreign exchange dealers in Tehran on Wednesday over the collapse of the Iranian currency, which has lost 40 per cent of its value against the dollar in a week, witnesses said.
Police fired teargas to disperse the demonstrators, angered by the plunge in the value of the rial. Protesters shouted slogans against President Mahmoud Ahmadi-Nejad, saying his policies had fuelled the economic crisis.

The United Arab Emirates' main market regulator approved new regulations to allow short-selling and lending borrowing of listed securities on Wednesday, in a move aimed at reviving the Gulf Arab state's moribund equity
markets.
The Securities and Commodities Authority said the new regulations, which include provisions for market-makers to participate in the country's financial markets, will enhance liquidity in the stock markets which have struggled to gain momentum after the 2008 global financial crisis.
In November 2011, the regulator published draft rules on short-selling and borrowing.

Dubai’s property sector, which went into free fall when the global financial crisis hit, looks like it might be on a path to recovery, with prices starting to bottom out and a few developers daring to roll out new projects.

At the annual Cityscape Global show, which served over years of property frenzy as a launch-pad for grandiose projects, a handful of developers displayed scale models for seaside and desert developments to test the appetite of the market.

Dubai-based investment bank Shuaa Capital will focus more on growing its lending business as part of a new strategy aimed at turning around losses which have mounted since the global financial crisis.

Shuaa, which has had three chief executives in the past year, expects to deploy half its balance sheet in the Shuaa Credit business by 2013, as it seeks to provide capital to the region's growing private sector, its executive chairman said on Wednesday.

The bank, which also runs an asset management division, is hoping that the strategy shift will return the bank to "positive territory" in 2013 and consistent profitability thereafter. It expects a loss in 2012.

Concerned by the overwhelming number of built environment disputes in the region, The Royal Institution of Chartered Surveyors (RICS) and the Dubai Land Department (DLD) will address this problem today and propose alternative solutions based on international professional standards at a joint conference on the Resolution of Property Disputes in the UAE, at the Dubai World Trade Centre, Maktoum Hall on 4 October 2012.

The objective of this joint conference is to urgently tackle the cost, delay and difficulty, experienced by all parties involved in disputes in the UAE built environment sector. It marks the culmination of years of close relationship between RICS and the DLD which began with the signing of a formal Memorandum of Understanding between the two bodies.

Over the last two years, RICS has been working closely with major organisations in the sector to establish a specialist dispute resolution capacity. RICS has trained and accredited a panel of more than 40 internationally qualified mediators, arbitrators and adjudicators available to provide dispute resolution services in the region.

The UAE’s purchasing managers’ index (PMI), a composite indicator of the performance of the non-oil private sector recorded a level of 53.8 in September, up from August’s 53.3.
The index, compiled by HSBC Holdings and Markit Economics signalled a solid improvement in operating conditions during the latest survey period reflecting optimistic sentiment, output was up moderately, despite robust expansions in new orders.
The headline seasonally adjusted HSBC United Arab Emirates PMI – a composite indicator designed to provide a single-figure snapshot of the performance of the non-oil private sector production levels expanded during September.

New Islamic banks set up in Oman will struggle initially to compete with established conventional banks offering sharia-compliant services when the country opens up its banking market, Fitch Ratings said.
While there is demand for Islamic banking, and its growth across the Gulf region is likely to outpace that of conventional banking, recent experience from Qatar suggests that customers in Oman will opt to get these services from established banks.
“Newly-created Islamic banks in Oman will face competition from incumbents such as BankMuscat and HSBC Bank Oman, which are setting up Islamic banking arms in preparation for the upcoming rule changes. We believe the combination of a well-known brand, an established network, service quality and cost-efficiency savings will give the incumbents a significant advantage. While the established banks will need to keep their existing and Islamic operations separate at the point of contact with the customer, there will be plenty of opportunities for cost savings at the operational level,” Fitch said in a statement.

Qatar Islamic Bank QISB.QA, the Gulf Arab state's largest sharia-compliant lender, returned to global debt markets after two years with a $750 million Islamic bond sale on Wednesday, tapping into strong liquidity for regional issuers.

The lender priced the five-year sukuk at a profit rate of 2.5 percent, and a spread of 175 basis points over midswaps, tighter than the earlier guidance after strong investor interest.

While banks in Qatar are very liquid, much of this cash is held in local riyals. With a number of infrastructure projects in the pipeline ahead of the country hosting 2022 football World Cup, lenders are keen for longer-term dollar funding.

Rashid Bin Ali al-Mansoori has been named the new chief executive officer of Qatar Exchange (QE), the bourse said on Wednesday, replacing Andre Went who will now work with the firm as a strategic advisor.

Mansoori, who is currently the deputy chief executive of the bourse, has previously worked with Qatar Investment Authority, the Gulf state's sovereign wealth fund, a statement from Qatar Exchange said on Wednesday.

"The appointment of Al-Mansoori....comes in line with the general policy of the State of Qatar of appointing highly-qualified Qataris in leading positions in government and semi government institutions," Ali al-Abdulla, acting chairman of the exchange's board said in the statement.

Went had joined the exchange in 2009 as part of a strategic partnership with NYSE Euronext.END

As Abu Dhabi and Dubai try to revive their property markets, competition is growing between the two emirates over attracting white-collar workers who can soak up the excess supply blighting both members of the United Arab Emirates.
In the last month, Abu Dhabi demanded that all government employees move to the capital from surrounding emirates. Dubai, meanwhile, is extending the length of residence visas that come with property purchases from six months to two years to lure overseas buyers seeking a financial or political haven in the emirate.

Dubai's bourse closes at its highest level for five months, while Abu Dhabi's index ends at a fresh 14-month
high.
The Dubai index jumps 1.2 percent to 1,623 points, its highest close since May 1.
The advance was aided by news that Vanguard Group, one of the largest mutual fund providers in the United States, would switch to using FTSE Group from MSCI for benchmarking, opening up stocks in the United Arab Emirates to their funds. While FTSE classifies the UAE as emerging market, MSCI ranks it as a frontier market.

Egyptian private equity firm Citadel Capital said on Wednesday its consolidated second-quarter net loss narrowed to 124.2 million Egyptian pounds from a previously stated 180.5 million pounds a year earlier.

The firm, which focuses on the Middle East and Africa, said revenue during the quarter was a negative 63.8 million pounds compared to a previously stated 117.9 million pounds in the second quarter of 2011.

Saudi Arabia's banks are set to report higher third-quarter profit after they extended loans to real estate and petrochemical projects, and helped arrange record Islamic bond sales. Net income at the 10 biggest banks in the world's top oil supplier probably advanced 12 per cent in the three months, Riyad Capital said in a report on September 29.

Arqaam Capital expects the nation's banks to post 8.7 per cent profit growth in the quarter, exceeding 5.4 per cent for lenders in Qatar, 1.3 per cent in the United Arab Emirates and a decline of 3.5 per cent in Kuwait. Borrowing costs surge Saudi interbank borrowing costs surged the most in the Gulf Cooperation Council (GCC) this year as property developers and petrochemical makers sought funds to take part in a government- led plan to build roads, airports and affordable housing.

Loans to private businesses grew the most in more than three years in August, while issuers including Saudi British Bank and food producer Almarai sold a record $8 billion of debt this year. "Increased demand for credit reflects the continuing economic expansion," Monica Malik, Dubai-based chief economist at EFG-Hermes Holding, said by email.

The Central Bank announced that money supply M0 (currency in circulation + currency at banks) increased by 3.8 percent from AED 53.1 billion at the end of June 2012 to AED 55.1 billion at the end of July 2012.

Money supply aggregate M1 (currency in circulation plus monetary deposits, i.e., current accounts and call accounts at banks) increased by 0.7 percent , from AED 284.3 billion at the end of June 2012 to AED 286.4 billion at the end of July of the same year.

Money supply aggregate M2 which comprises of M1 and quasi-monetary deposits (resident time and savings deposits in Dirhams, commercial prepayments in Dirhams and resident deposits in foreign currencies), increased by 0.7 percent, from AED 827.1 billion at the end of June 2012 to AED 832.5 billion at the end of July of the same year.

The National Bank of Abu Dhabi, or NBAD, has revised its economic growth forecast for the UAE to 3.3 per cent from the 2.6 per cent it projected at the beginning of the year as the nation produced more oil, which yielded better prices.
NBAD has revised its estimates on the assumption that “oil output has risen”, NBAD group chief economist Dr Giyas Gokkent said.

However, he added that “we assume oil production growth may be limited in 2013 and are thus pencilling in real GDP growth of 3.2 per cent year-on-year”.

Spreading the risk is a central tenet of commercial banking around the world. Loans to numerous borrowers, in many and varied sectors of the economy and society, are the best defence against unforeseen crisis, default and collapse.

The International Monetary Fund, the world economy's steward of stable growth, regularly assesses national banking systems. While deeming the UAE's banking network reasonably stable, the IMF has been saying since March that the UAE's Central Bank should monitor risk management at individual banks.

Loans to Europe are one concern, but again this May the IMF also cited "increasing credit concentration" in lending to "government-related enterprises" (GREs), the numerous, prominent operations that inhabit the borderlands between the private sector and Government in the UAE. After the Dubai World crisis of 2009, the IMF says bluntly, "market perceptions of sovereign default risk remain elevated". This is why total GRE debt rose past $176 billion (Dh646bn) last year. The IMF also said more information about GRE debts would improve lenders' confidence.

The altruistic actions of central bankers often have far-reaching and unintended consequences.

Take, for example, the decision of the Irish financial authorities in September 2008 to guarantee all bank deposits in the country.

It was lauded as a splendid move at the time, putting the sovereign's money where its mouth was to halt the collapse of the banking system. But ultimately it led to the bankruptcy of the country and a bailout from the European Union.

Ali Rashid Lootah, the chairman of the Dubai developer Nakheel, hopes with this year's Cityscape in the emirate he is finally able to convince the property-buying public to put their trust back in his company.

As there were long lines of more than 120 people outside his sales office hoping to get their hands on new villas at the Jumeirah Park scheme this week, it looks like he might succeed.

The developer took deposits for 202 of 360 villas at the scheme with a total value of Dh888 million (US$241.7m). For Mr Lootah it is a promising sign the work he has put in for the past two years is finally paying off.

Two of the UAE's biggest banks are quietly suggesting the federal Government should establish a fund to buy up debts they are no longer allowed to hold under controversial new lending rules.

In April, the Central Bank announced a limit on how much UAE banks could lend to governments and their commercial entities and gave the lenders six months to comply. The deadline to meet the new rules passed on Sunday.

Senior sources, who did not want to be identified, at the banks based in Dubai, are privately briefing in support of a fund to absorb their excess exposures to government entities at cost instead of at fire-sale prices to other banks and hedge funds.

Drydocks World, a Dubai-based ship-building and repair firm restructuring $2.2 billion of debt, said on Tuesday it completed the sale of a 67 per cent stake in its Southeast Asian operations to Pacific Carriers, an Asian shipping company owned by Malaysian tycoon Robert Kuok.
Drydocks in June said it was setting up a joint venture with Pacific Carriers without providing financial details.
“PCL (Pacific Carriers) acquired and subscribed to 67 per cent of the shareholding of” Drydocks Southeast Asia, the company said. “DDW SEA had recently completed a debt restructuring scheme in Singapore resulting in DDW SEA being a debt-free company,” it added.
The new entity will be renamed as DDW-PaxOcean Asia Pte Ltd and comprises a shipyard in Singapore, three shipyards in Indonesia and a shipping division.END

Continuing from the trends witnessed toward the end of July 2012, real estate transactions in key MENA markets trended downwards in August 2012, owing to a seasonal slowdown and lower business activity levels due to Ramadan and Eid holidays, Kuwait Financial Center (Markaz) monthly report for September 2012 revealed Tuesday.
Total value transacted in all reported markets combined moved downwards in August compared to the previous month. However, on a Y-o-Y basis, both number of transactions (-40.0 percent) and value transacted (-24.8 percent) declined Y-o-Y in Saudi Arabia, while Qatar & Kuwait witnessed Y-o-Y increases.
Data from Dubai Land Department (DLD) revealed that real estate transactions in August receded compared to the previous month, but were marginally higher than the levels compared to a year ago.

Gulf Capital, one of the most active alternative investment firms in the Middle East based in Abu Dhabi, announced Tuesday that its portfolio company, Techno Group Investment Holdings (TGIH), has acquired a strategic stake in Med Ray, Jordan’s premier diagnostic imaging centers company.
This latest acquisition is part of Gulf Capital’s broader strategy to continue its investment program in the fast-growing regional healthcare sector.
Gulf Capital already owns a controlling stake in Technoscan, the largest diagnostic imaging centers company with centrers spread across the region.